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Estácio: Corporate Presentation - June/2011
Estácio: Corporate Presentation - June/2011
Estácio: Corporate Presentation - June/2011
Estácio: Corporate Presentation - June/2011
Estácio: Corporate Presentation - June/2011
Estácio: Corporate Presentation - June/2011
Estácio: Corporate Presentation - June/2011
Estácio: Corporate Presentation - June/2011
Estácio: Corporate Presentation - June/2011
Estácio: Corporate Presentation - June/2011
Estácio: Corporate Presentation - June/2011
Estácio: Corporate Presentation - June/2011
Estácio: Corporate Presentation - June/2011
Estácio: Corporate Presentation - June/2011
Estácio: Corporate Presentation - June/2011
Estácio: Corporate Presentation - June/2011
Estácio: Corporate Presentation - June/2011
Estácio: Corporate Presentation - June/2011
Estácio: Corporate Presentation - June/2011
Estácio: Corporate Presentation - June/2011
Estácio: Corporate Presentation - June/2011
Estácio: Corporate Presentation - June/2011
Estácio: Corporate Presentation - June/2011
Estácio: Corporate Presentation - June/2011
Estácio: Corporate Presentation - June/2011
Estácio: Corporate Presentation - June/2011
Estácio: Corporate Presentation - June/2011
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Estácio: Corporate Presentation - June/2011

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Estácio: Corporate Presentation - June/2011

Estácio: Corporate Presentation - June/2011

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  • 1. June, 2011 CORPORATE PRESENTATION INVESTOR RELATIONS
  • 2. WHY THIS IS “THE MOMENT” OF BRAZILIAN  EDUCATION SECTOR? STRENGTHENING THE FOUNDATIONS Brazil Chile Mexico Argentina France South Korea Germany Japan USA Russia Evolution Performance Zero 450 Performance and Evolution - Countries Change in Educational Scenario in Brazil 57% 47% 39% 32% 25% 17% 10% 1950 1960 1970 1980 1991 2000 2010 Illiteracy Rate - Brazil 2 Source: IBGE
  • 3. 3 Income Distribution (In millions of people) Source: Cetelem - O Observador Consumer’s Confidence Unemployment Rate (%) Source: BC, ACSP Source: BC, ACSP Aging Population Source: IBGE WHY THIS IS “THE MOMENT” OF BRAZILIAN  EDUCATION SECTOR?
  • 4. GOVERNMENT SUPPORT Student Financing Long-term financing to low-income students 3.4% p.a. nominal interests with 18-year term No guarantor required from 2011 onwards Allows further penetration in Classes C and D Comparative Interest Rates 4 WHY THIS IS “THE MOMENT” OF BRAZILIAN  EDUCATION SECTOR?
  • 5. 2004 2005 2006 2007 2008 2009 2010 2004 2005 2006 2007 2008 2009 20102004 2005 2006 2007 2008 2009 Credit in Brazil Mortgage Lending in Brazil Total Light Vehicle Sales Financed Homes +19% +41% +11% +31% CAGR CREDIT EVOLUTION 5 WHY THIS IS “THE MOMENT” OF BRAZILIAN  EDUCATION SECTOR? New units constructed / acquired through housing finance in Brazil Source: BACEN Evolution of brazilian mortgage amount financed. Source: CBIC/BACEN Total number of light vehicles sold in Brazil (financed and non financed). Source: ANFAVEA. Total amount of Credit in Brazil. Source: BACEN
  • 6. 2020 EDUCATION SECTOR  6 Sensitivity Analysis– Annual Growth Drop-outRate “Conversion” of Working Adults 6,0 6,5 7,0 7,5 8,0 12,0 2,7 4,0 5,2 6,5 7,7 11,5 3,2 4,5 5,7 7,0 8,2 11,0 3,7 5,0 6,2 7,5 8,7 10,5 4,2 5,5 6,7 8,0 9,2 10,0 4,7 6,0 7,2 8,5 9,7 3,500 Children  Start High  School  Every Year 3,500 Children  Start High  School  Every Year 700 go  straight to  the Colleges 700 go  straight to  the Colleges ‐1,440  Graduated & Drop‐out ‐1,440  Graduated & Drop‐out 14,000 +  1,050 = 15,050 Youngsters in Class C & D  with High School Degree  are out of the Colleges 14,000 +  1,050 = 15,050 Youngsters in Class C & D  with High School Degree  are out of the Colleges 350 Private Higher  Education Institutions 350 Public  Institutions 350 Private Higher  Education Institutions 350 Public  Institutions 1,603 New  Enrollments 1,603 New  Enrollments 163 New Students  “Net" per Annum 163 New Students  “Net" per Annum 2.7% Growth Rate  per Annum 2.7% Growth Rate  per Annum 7,637  Total Enrollments  Estimated for 2020 7,637  Total Enrollments  Estimated for 2020 1,750  Graduated  in High  School 1,750  Graduated  in High  School 1,750  Drop‐out  High School 1,750  Drop‐out  High School 50% 1,050 stop  studing 1,050 stop  studing 60% ‐720 Graduated ‐720 Drop‐out ‐720 Graduated ‐720 Drop‐out 12% 12% 903 Young Adults  in Private Higher  Education  Institutions 903 Young Adults  in Private Higher  Education  Institutions 6% 6,000 Total Base of  The System 6,000 Total Base of  The System WHY THIS IS “THE MOMENT” OF BRAZILIAN  EDUCATION SECTOR? Government target:  10,000 students by 2020 Government target:  10,000 students by 2020 Break‐even CAGR: 5% per year Break‐even CAGR: 5% per year
  • 7. . . . . . . . . . . .. . . . . . . NATIONAL COVERAGE 241k students 72 campuses in 36 major cities in Brazil 51 accredited Distance-learning Centers 78 programs ESTACIO’s Regional Footprint¹Highlights ESTACIO AT‐A‐GLANCE Key Figures (1) Estácio also owns a University in Paraguay with 2.7 thousand students University Center University College In process to Upgrade to University Center . Distance Learning Center Nationwide operations, covering states that account for 86% of GDP and 82% of population – Largest private post-secondary education group in Brazil – Leading presence in the large and underserved working adults target group – Diversified portfolio of programs with differentiated quality and competitive pricing – First Brazilian education company listed in Novo Mercado 7
  • 8. 23 35 141 178 218 206 210 241 1.9% 14.8% COMPANY´S BACKGROUND KEY MILESTONES – New academic model – 2005 – 2007: for-profit transformation Greenfield Growth Consolidation of national leadership Listed Company and preparation for growth 1970 … … 2002 … … 2007 2008… 80’s - 90’s … # of students (‘000) CAGR Turn aroundTurn aroundIPO OnFollow-On – Acquisitions in the São Paulo market – GP acquires 20% of Estácio – Estácio joins in Novo Mercado – Organic growth – M&A – Efficiency gains – Distance Learning – Beginning of management restructuring Note: Until 2007 the student base did not include graduate students. 2009 2010 2011 1.5% 41.7% 4.8% 22.5% (5.5%) 8 – Distance learning launching – Shared Services Center (“SSC”)
  • 9. MANAGEMENT TEAM WITH LARGE EXPERIENCE 9  Holds a bachelor’s degree in business administration from FGV and a bachelor’s degree in law from the USP  Joined GP in 2005 as a Partner  More than 15 years of investment banking experience as Head of M&A at DLJ-Brazil and Banco Garantia and as a Partner of Singular  Served as Senior Vice President for Business Development and Board Member at UOL and Grupo Folha Eduardo Alcalay Chief Executive Officer Rogerio Melzi CFO and Investor Relations Officer João Luís Barroso Development and Corporate Relations Miguel de Paula Human Resources Officer Paula Caleffi Chief Academic Officer Pedro Graça Chief Marketing Officer  Holds a bachelor’s degree in Mechanical Engineering from Mackenzie University, a bachelor’s degree in Business Administration from FGV and Master in Business Administration from Stanford University.  Suplly Chain Planning & Performance at Inbev/Labatt , Financial Planning Officer at Suzano Holding and Associate at Booz-Allen. Virgilio Gibbon Chief Operating Officer  Holds a bachelor’s degree in Economy from the University Gama Filho, master and doctorate’s degree in Economy from the FGV  Institutional Relations Officer at Vivo, CEO at CBS Security System, Corporate Support Director at CSN.  RJ Secretary of the Treasury Chief and Assistant Secretary for Economic Policy of the Ministry of Economy, Planning and Finance  Holds a bachelor’s degree in Business Administration from Ulbra University, master in Business Administration at USP and STC Executive at Kellog University, Strategic Human Resources Planning at Michigan University.  HR general manager at Gerdau, HR Officer at Farmasa and HR Officer at Votorantim Cimentos Ltda.  Holds a bachelor’s degree in History from Universidade Católica/RS and doctorate’s degree at Universidad Complutense de Madrid.  Served as Academic Development officer at University of Vale do Rio dos Sinos.  Holds a bachelor’s degree in System Analysis from Mackenzie University and postgraduate in Business Administration at FGV.  Co-owner of ENAD and Sistema Energia de Ensino.  Responsible for the Estacio’s Distance Learning start-up, expansion and consolidation.  Holds a bachelor’s degree and a graduate degree in Economy from PUC-RJ.  Partner and Director at TOTVS Consulting and responsible for implementing Estácio’s Shared Services Center.  More than 10 years experience at Consulting, mostly dedicated to Operations and Efficiency related projects.
  • 10. TURN AROUND AND RESTRUCTURING 10 People & Culture Processes & IT Product & Marketing PLATFORM FOR GROWTH & INNOVATION
  • 11. KEY MILESTONES Seeding Harvesting 23 35 141 178 218 206 210 241 1.9% 14.8% COMPANY´S BACKGROUND – New  academic  model – 2005 – 2007: for-profit transformation Greenfield Growth Consolidation of national leadership Listed Company and preparation for growth 1970 … … 2002 … … 2007 2008… 80’s - 90’s … # of students (‘000) CAGR IPO Follow OnFollow-On – Acquisitions in the São Paulo market – GP acquires 20% of Estácio – Estácio joins in Novo Mercado – Organic growth – M&A – Efficiency gains – Distance Learning – Beginning of full management restructuring Note: Until 2007 the student base did not include graduate students. 2009 2010 2011 1.5% 41.7% 4.8% 22.5% (5.5%) 11 – Distance  learning  launching – Shared Services  Center (“SSC”) Turn aroundTurn around Focus on the means toward sustainable results
  • 12. 12 PROCESSES ‐ SSC PROCESSES STANDARDIZATION AND CENTRALIZATION 72 CAMPUSES 7.2K TEACHERS 3.5K ADM. EMPLOYEES 241K STUDENTS 36 LOCATIONS INTEGRATION SERVICELEVEL AGREEMNENT CENTRALIZATION SCALE STANDARDIZATION EFICCIENCY HUMAN RESOURCES & PAYROLL ACCOUNTING BILLING & COLLECTION INTEGRATION ACADEMIC OPERATIONS & REGULATORY PROCUREMENT TECNOLOGY 300 FTE 250k invoice/month 8k payment/month 17k MEC processes 360k candidates 18 balance sheets S S C 2009
  • 13. 13 Academic Solution 400 thousand students Over the next 3 years Estácio will invest R$30 mm to completely redefine its technology platform in order to boost performance and increase reliability to users. CHANGING THE PLATFORM FOR GROWTH Adding New Features CRM Students briefcase (scanned documents) High performance PROCESSES – LOOKING AHEAD NEW IT ARCHICTECTURE
  • 14. PRODUCT  14 NEW ACADEMIC MODEL Reduced costs … Improved gross margin Integrated curricula with shared disciplines 20% of distance learning content in on- campus programs 20% of self-learning activities O T H E R S Innovation and product reengineering aiming at better quality at competitive pricing ... with quality and differentiation Higher attraction and retention of students 41 programs updated to labor market demands (90% of Estácio’s current student base) Tailor made text books bundled in tuitions Comprehensive student portal On-line library with more than 2,000 titles E S T A C I O
  • 15. UNIQUE PRODUCT OFFERING Quality curricula Improved access to learning tools Accessible prices Bundled in financing 15 CONTINUOUS INNOVATION
  • 16. 16 PEOPLE & CULTURE Getting the right people at the right place – Expertise in education combined with experience from several industries – Visits to campuses are constant in CEO’s agenda – Monthly Performance Meetings with regional divisions – COO visited all units more than once over the last 2 years Aligning people through meritocracy & variable compensation – Stock option to 48 senior executives (up to 4.5% of capital to be granted) – More than 300 managers with individual, monthly tracked goals driving their variable compensation (financial and non financial) – 20% of professors with variable compensation based on performance C U L T U R E Estacio’s way Attracting and retaining new talents – Trainee programs and accelerated career planning based on meritocracy – Culture set to groom internal talents for self-sustained growth – Excellence in human talents in all levels is top priority – Zero-based budgeting – Matrix budgeting – Business Intelligence – “Gestão a vista” – Six Sigma – Benchmarking Using managerial tools to develop and improve processes & results Managing by “walking around” to guarantee execution and disseminate culture
  • 17. CHALLENGE TO IMPLEMENT ALL THE CHANGES... 17 Fixing the company – Ex.: returning with program coordinators (R$ 12 mm/year) Developing an entirely new product Cleaning up student base Creating a new culture Revamping company’s image Investing in infra structure, technology and services Holding inflationary pressures and… Dealing with labor tax (INSS) ramp up (@ R$16mm/year) 15 30 45 60 2007 2008 2009 2010 INSS RAMP UP Brazilian Social Security Institute (in R$ millions)
  • 18. ...WITHOUT LOSING MARGINS EBITDA MARGIN  Main Operating Indicators (‘000) 2008 2009 2010 Total Student Base 218.3 205.7 210.0 On-Campus 218.3 196.1 183.8 Distance Learning - 9.6 26.2 Main Financial Indicators¹ (R$ million) 2008 2009 2010 Net Revenue 980.0 1,008.8 1,016.2 Cost of Services (629.1) (656.6) (657.5) Sales (83.9) (91.6) (95.3) G&A (177.7) (151.7) (148.8) EBITDA 98.4 119.1 127.3 Margin EBITDA 10.0% 11,8% 12.5% ¹ Excluding Depreciation and non recurring items. 18 10.0% 11.8% 12.5% 17.4% 16.8% 19.9% 21.7% 26.2% 2008 2009 2010 1Q11 EBITDA Margin EBITDA Margin ex. the Brazilian Social Security Institute (INSS) RESULTS  Changing the tire without parking the car
  • 19. ...AND IMPROVING QUALITY COURSES EVALUATION  ON‐SITE VISITS 2010/11 19 58 60 64 56 56 62 2008 2009 2010 PESA Corporate Climate PESA AND CORPORATE CLIMATE  46 Courses 50 Courses 9 Courses 7 Courses Grade 3 Grade 4 Grade 5 No grade Source: Copernicus, Hay.
  • 20. 20 People & Culture Processes & IT Product & Marketing STRONG FOUNDATION 2011 – LAST YEAR OF LABOR TAX STEP‐UP… TIME TO HARVEST
  • 21. ORGANIC GROWTH & MARGIN GAINS 21 3% Market growth + inflation pass-through 800 basis points over 4 years (2011-2014) 200 200 150 250 800 New academic model Faculty costs Other costs G&A Total Benchmarking / Matrix and Zero-based Budgeting/ Centralization Dilution through M&A and Distance Learning Online / Sharing / Off-class activities Academic planning
  • 22. DISTANCE LEARNING 22 From zero to 30 thousand students in 1.5 years Expect to reach 80 thousand students in 4 years High-quality product, using campuses as centers 11 programs and growing Opportunity to increase coverage 6.2 7.5 14.9 19.2 22.3 23.7 28.2 1.6 2.1 1.5 1.7 2.4 2.5 2.7 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 (Students in thousands) +296.2% 24.7 20.9 16.4 9.6 7.8 Graduate Undergraduate 26.2 30.9 DISTANCE LEARNING GROWTH
  • 23. NEW PRODUCTS 23 Revamp Graduation Programs Preparatory courses  Take advantage of Distance Learning platform  Cross Selling  Academia do Concurso  Over 29,000 students in 2010  R$ 10.4 million net revenue in 2010 Corporate Universities Non regulated short-term products EXECUTIVE DIRECTOR FOCUSED ON NEW PRODUCTS
  • 24. M&A 24 ACQUISITIONS WITH DISCIPLINE North and NE 48 Central Brazil 30 SP and South 32 Rio de Janeiro 10 Region> <# of Targets> 120 2.314 private Entities IRR Valuation Post-Audit Targets for variable compensation linked to Business Plan  Size over 2 thousand students  Attractive cities  Strategic fit  Assets quality
  • 25. Main Financial Indicators (R$ million) 1Q10 1Q11 Chg Net Revenue 256.0 275.8 7.7% Cost of Services (158.6) (168.7) 6.4% Gross Margin 35.9% 36.8% 2.5% Sales (24.4) (29.0) 18.9% G&A (36.6) (36.1) -1.4% EBITDA 39.6 47.9 21.0% Margin EBITDA 15.5% 17.4% 1.9 p.p. * Excluding depreciation and non recurring items. 1Q11 FIRST RESULTS 25 2nd time in a row… all times record for intakes 48.9 61.5 10.2 12.0 1Q10 1Q11 59.1 73.5 Distance LearningOn‐Campus Total Student +24.4% 33.0 39.2 6.4 11.1 3Q09 3Q10 39.6 50.3+27.0% STUDENT INTAKES 2 new greenfield campuses  Sulacap  Chacara Flora 4 M&A  Atual  FAL  Academia do Concurso  FATERN EXPANSION 4.500 students 2.400 students 29.000 students 3.350 students Chacara Flora  Sulacap Atual
  • 26. Quality + Profitability = Sustainability CONCLUSION 26
  • 27. Investor Relations: Flávia de Oliveira E‐mail: flavia.oliveira@estacio.br Phone: +55 (21) 3311‐9789 Fax: +55 (21) 3311‐9722 Address: Av. Embaixador Abelardo Bueno, 199 – Office Park – 6thfloor CEP: 22.775‐040 – Barra da Tijuca – Rio de Janeiro – RJ – Brazil Website: www.estacioparticipacoes.com/ir This presentation may contain forward‐looking statements concerning the industry’s prospects and Estácio Participações’ estimated financial and operating results; these are ere projections and, as such, are based solely on the Company management’s expectations regarding the future of the business and its continuous access to capital to finance Estácio Participações’ business plan. These considerations depend substantially on changes in market conditions, government rules, competitive pressures and the performance of the sector and the Brazilian economy as well as other factors and are, therefore, subject to changes without previous notice. We are a holding company, and our only assets are our interests in SESES, SESSA and IREP, and we currently hold 99.9% of the capital stock of each of these subsidiaries. Considering that the Company was incorporated on March 31 2007, the information presented herein is for comparison purposes only, on a proforma unaudited basis, relative to the first three months of 2007, as if the Company had been organized on January 1 2007. Additionally, information was presented on an adjusted basis, in order to reflect the payment of taxes on SESES, our largest subsidiary, which from February 2007, after becoming a for‐profit company, is subject to the applicable taxation rules applied to the remaining subsidiaries, except for the exemptions arising out of the PROUNI – University for All Program (“PROUNI”). Information presented for comparison purposes should not be considered as a basis for calculation of dividends, taxes or for any other corporate purposes. IR CONTACTS 27

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